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Technical Analysis of Gold

After the big drop in over two and a half months falling from 1.790 to 1.665 following the less dovish speech of Federal Reserve Chairman, gold managed to regain some ground as the market sentiment shifted to positive on the back of the good news about the Greek swap deal. The precious metal pushed up $40 to settle around the 1.700 area this morning, supported by the fact that the recent rally of the US Dollar Index has been put on ice. However, the picture could change for the precious metal today. During the early European session price activity is likely to remain quiet ahead of the NFP release later in the day, which is the main event risk for the greenback. U.S. Non-Farm Payrolls are projected to increase another 210K in February and the ongoing improvement in the labor market may instil a bullish outlook for the dollar as the development dampens the scope for another large-scale asset purchase program. The technicals also paint a bearish picture for the precious metal with a bearish alignment of the 20 EMA and the 50 EMA on the hourly chart and the MACD crossing below zero, it looks like the bears could take control of the market soon. Short positions could target 1680, 38.2% Fibonacci level from August high to December low. In the alternative scenario that the bulls take hold of the market, we could see a test of the 1723 level, the 50% Fibonacci level.
Gold Daily Chart

Gold Hourly Chart

Dafni Serdari
Market Analyst
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The comment in this blog is the personal opinion of the contributors and not Intertrader.com. The content does not constitute financial, investment or tax advice. You are advised to discuss your specific requirements with an independent financial adviser prior to entering into any bet. Intertrader.com is not responsible and disclaims any and all liability for the content of comments written by contributors to the blog, and the content of any third party sites linked from this blog.

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